Failing to intervene in the steel crisis could cost British taxpayers an extra £1.5 billion in welfare benefits and the cost to local communities every year, the shadow chancellor has warned.
John McDonnell argued that nationalising the steel industry "in the short term", while a private buyer is found, would save money in the long-run.
Indian company Tata Steel announced plans last week to sell its UK business, putting a total of 40,000 jobs at risk both directly and in the supply chain. Its assets include the UK’s biggest steel plant, in Port Talbot, south Wales.
Speaking on BBC One's Andrew Marr Show on Sunday, McDonnell said: "We know this isn't a zero-cost exercise. If it closes now, we could be into a cost of £1–1.5 billion a year just supporting people on welfare benefits, the collapse of the local economies – we saw it with the mining. We must not desert these communities."
An aide to McDonnell told BuzzFeed News that the £1–1.5 billion figure was taken from the National Audit Office and the government's own statistics. He later clarified that the figure referred to both the cost of out-of-work benefits for steelworkers and the cost to local economies.
McDonnell said it might be necessary to nationalise the steel industry for a short while to "prepare the sector for another buyer".
"Part of the reason that buyers have not been coming forward is they've not seen an industrial strategy in this country that depends upon steel," he said. "If we were in government now, we'd be working with potential buyers who'd have the confidence about investment."
But business secretary Sajid Javid, who was also on the show, said he did not believe nationalisation was the answer. "I don't think nationalisation is a solution to this," he said.
"Having said that, I also think it wouldn't be prudent to rule anything out at this stage, but I think that nationalisation is rarely an answer in these situations."
He said the government was ready to offer "support" to a potential buyer "and give that steel plant a long-term, viable future".